Territorial Jurisdiction in PMLA Cases Determined by Offence Location & Arrest Site, Not Predicate Offence Origin: Himachal Pradesh High Court

Himachal Pradesh High Court Dismisses PMLA Writ Petition Citing Lack of Territorial Jurisdiction

Shimla, Himachal Pradesh – The High Court of Himachal Pradesh , comprising Chief Justice G.S. Sandhawalia and Justice Ranjan Sharma , has dismissed a criminal writ petition filed by Gian Chand challenging his arrest and subsequent remand orders under the Prevention of Money-Laundering Act, 2002 (PMLA). The court ruled that it lacked territorial jurisdiction to entertain the petition, as the arrest, remand proceedings, and the predicate offense FIR primarily fell outside the state’s geographical boundaries.

Case Overview: Challenge to Arrest and Remand

The petitioner, Gian Chand , proprietor of Jai Maa Jawala Stone Crusher, was arrested by the Enforcement Directorate (ED) in New Delhi on November 18, 2024, under Section 19(1) of the PMLA. He was subsequently remanded to ED custody and then judicial custody by the Special Court in Ghaziabad, Uttar Pradesh. Chand challenged these orders, arguing that the principal predicate offenses originated within the jurisdiction of the Himachal Pradesh High Court and thus, the Ghaziabad court had no jurisdiction. He claimed his fundamental rights under Articles 21 and 22 of the Constitution were violated.

Arguments Presented

Petitioner’s Counsel , Mr. Vikram Chaudhri , Senior Advocate, argued that the initial Enforcement Case Information Report (ECIR) was lodged in New Delhi based on FIRs registered in Himachal Pradesh related to illegal mining. He contended that the arresting officer arbitrarily chose a court outside Himachal Pradesh , violating the principles of natural justice and fundamental rights. Counsel cited precedents emphasizing the necessity of informing the grounds of arrest and the importance of judicial review even after the filing of a prosecution complaint. He argued that the core of the alleged illegal activity and initial ECIR related to Himachal Pradesh , thus vesting jurisdiction with the Himachal Pradesh High Court.

Representing the Respondents , Mr. S.V. Raju , Additional Solicitor General of India for the ED, vehemently opposed the jurisdiction of the Himachal Pradesh High Court. He pointed out that the predicate offense FIR No. 360/2024 was registered in Saharanpur, Uttar Pradesh, based on which an addendum to the ECIR was made. The arrest occurred in New Delhi, and all subsequent remand and cognizance proceedings took place in Ghaziabad. Mr. Raju relied on Sections 177 to 180 of the erstwhile Cr.P.C (and corresponding Sections 197 to 200 of BNSS, 2023) to assert that the jurisdiction lies where the offense is committed or where consequences ensue. He emphasized that the laundering activities and a significant portion of the alleged proceeds of crime were connected to Uttar Pradesh. He cited Rana Ayyub v. Directorate of Enforcement and Serious Fraud Investigation Office v. Rahul Modi , emphasizing that jurisdictional issues should be addressed by the court with territorial jurisdiction.

Court's Analysis and Decision

The High Court, after considering arguments from both sides, focused on the question of territorial jurisdiction as a preliminary issue. The court noted that while the initial ECIR was based on alleged illegal mining in Himachal Pradesh , the crucial FIR No. 360/2024, which formed the basis for the arrest and subsequent proceedings, was registered in Saharanpur, Uttar Pradesh. The arrest itself occurred in New Delhi, and remand orders were passed by the Special Court in Ghaziabad.

The bench referred to the Supreme Court's judgment in Serious Fraud Investigation Office vs. Rahul Modi , which held that when remand orders are passed by a competent court, a habeas corpus petition challenging detention should be filed before the High Court having jurisdiction over the remanding court. Applying this principle, the Himachal Pradesh High Court concluded that since the remand and cognizance were taken by the Ghaziabad court, it lacked jurisdiction.

The court also cited Rana Ayyub v. Directorate of Enforcement , reiterating that the trial for money laundering should occur before the Special Court that has taken cognizance of the offense, and territorial jurisdiction for scheduled offenses should follow the money laundering trial, not vice versa. The judgment emphasized that offenses under PMLA are constituted by activities connected with proceeds of crime, including possession, concealment, acquisition, and use, and jurisdiction can arise in areas where these activities occur.

Pivotal Excerpt from the Judgment:

> “In such circumstances, the scheduled offence had been lodged in District Saharanpur in FIR No. 360 of 2024 and the Special Court had passed the remand order, we are of the considered opinion that this Court as such would be denuded of jurisdiction to entertain the arrest having taken place at New Delhi and ECIR having been lodged in Delhi, merely because initially there was some notice of FIRs in the jurisdiction of this Court and a raid was carried out which has led to the trail of proceeds of crime, as such would not bring it within the ambit of part of cause of action by which this Court would test the merits as such of the arrest order…”

Final Verdict and Implications

Ultimately, the High Court dismissed the writ petition, holding that it did not possess the territorial jurisdiction to adjudicate on the legality of the arrest and remand orders passed by courts in Uttar Pradesh. The court clarified that its decision was limited to jurisdiction and did not delve into the merits of the arrest. The petitioner is left with the recourse to challenge his arrest before a court of competent jurisdiction, presumably in Uttar Pradesh or Delhi, where the relevant proceedings have taken place. This judgment underscores the significance of territorial jurisdiction in PMLA cases and clarifies that the location of arrest and subsequent proceedings, along with the location of predicate offense FIR registration, play a crucial role in determining the appropriate court for legal challenges.